Category: Scams

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Australia Investing Scams

ASIC Cautions Investors Against “Finfluencers”

The Australian Securities and Investments Commission (ASIC) has cautioned new and young investors about the risks of taking advice from social media and finfluencers.

So-called “finfluencers” have been circulating on YouTube and social media platforms Instagram and TikTok claiming they can “help you on your journey to financial freedom” while technically “not giving financial advice”.

While social media can be okay as a means of getting background information … relying on it comes with a degree of risk […] Advice may not be licensed and you may get information on something that is inaccurate.

Somer Taylor, senior manager of retail complex products and investor protection, ASIC

Last month, ASIC chairman Joe Longo told a parliamentary committee hearing that social media influencers giving financial advice was an “area of big concern” for the agency.

Young People and Newcomers Are Most Vulnerable

A large number of millennials and generation Zs have turned to investing in cryptocurrencies and equities to generate wealth. And since investing in crypto has so few barriers, people can easily buy in. For first-time investors with some computer savvy and extra cash, it might seem like quite the opportunity.

[New market entrants] have been engaged in short-term speculation rather than long-term wealth creation.

ASX 

In 2020, more than 435,000 investors placed their first trade on the ASX, with almost half of these investors aged between 25 and 39, and 18 percent under 25. These under-40s are recognised as a tech-savvy age group. However, in this age of information overload, it can be difficult to know who and what to trust.

There have been instances of Instagram influencers orchestrating their own scams, stealing from the followers they were supposedly helping. An influencer might be paid to promote a certain product or idea, manipulating assets or even markets, pumping and dumping assets for individual gain. There have been many examples of investors getting scammed, even by semi-reputable e-sports influencers.

Australians lost millions to bitcoin scams in 2020, and following a recent report from the Australian Competition and Consumer Commission (ACCC), the amount of money lost to scams involving bitcoin since the start of this year already equals the entire losses of 2020.  

Most people don’t understand cryptocurrency; they just hear the buzz around it … and they need to do their research.

Delia Rickard, deputy chair, ACCC

Pump and dump activity has long been a problem in the local share market as well as the crypto market. Somer Taylor, ASIC’s senior manager of retail complex products and investor protection, says she has witnessed a sharp increase during the pandemic with a wave of new participants entering the market.

International Finfluencers Not Subject to Australian Laws

In Australia, anyone giving financial advice must have an Australian Financial Services Licence (AFSL). However, the finfluencers with the biggest social media followings are from overseas and not subject to Australian laws. The ASX has warned investors to vet their sources of information before acting on it.

With TikTok’s #moneytok getting more than 7.6 billion page views and #stocktok 1.3 billion, there is an overabundance of finance-related information being shared. Many companies even collaborate with influencers on marketing campaigns.

It’s unfortunate that many companies are being led to believe that building ‘advocacy’ with these types of finfluencers is the right way to engage with investors.

Sarah Lenard, managing partner, strategic consultancy Advisir

Some think they can give financial advice as long as they add the disclaimer “this isn’t financial advice”. But the penalty for giving unlicensed advice in Australia is up to five years’ imprisonment and/or a fine of up to $133,200 for an individual and 10 times that for businesses.

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Bitcoin Crime Crypto News Scams

Tinder Date Goes Bad in Attempted Crypto Grab

A US man was drugged by a woman he met on Tinder who then attempted to steal his crypto.

The man, who was a client of Casa, a company that offers heightened Bitcoin security, reported the attempted robbery to the Casa team, who performed a postmortem on the incident.

Over the weekend, a CasaHODL client survived a ‘wrench attack’ – he was drugged and persuaded to give up access to phone, accounts, and passwords. With the client’s permission, we are sharing the story to help others learn to protect themselves.

Tweet from Nick Neuman, CEO & co-founder of CasaHODL

Beware the Tinder Trap

A blog post written by Casa’s Jameson Lopp details the strange and concerning attack. According to the victim, the woman claimed to be a crypto trader on her bio, which intrigued him and helped him establish common ground with her. After chatting online, they met up at a coffee shop. He thought she looked different from her photos, but not enough to raise any red flags.

Later, they went back to his place for a drink and while he was in the bathroom it is suspected the woman laced his drink with scopolamine, also known as ‘Devil’s Breath’, or a benzodiazepine. Both drugs cause loss of inhibition and memory. He woke up the next day, noticing that his phone was missing and that attempts had been made to withdraw crypto from several of his accounts.

Thankfully, the man was not harmed in any way and the perpetrator only managed to steal a small amount of his crypto, largely thanks to Casa’s multisig technology. The scammer managed to get a small amount of bitcoin out of one of his exchange accounts. He was able to block some of the other requested purchases and withdrawals by contacting those custodians to inform them of the compromise.

The attacker managed to get a small amount of bitcoin out of one of our client’s exchange accounts. He was able to block some of the other requested purchases and withdrawals by contacting those custodians to inform them of the compromise. Since the attacker only had one of the client’s five keys to his Casa multisig, those funds could not be spent.

Jameson Lopp, Casa co-founder

A Rise in Crypto Scams

Although this incident is bizarre, it is sadly not unprecedented. As the price of Bitcoin continues to rise, so too do the scams, particularly romance scams. According to Australian government website Scam Watch, there were 277 reports of romance scams in June alone, resulting in losses of A$5,857,472. Many of these incidents do not make the news though there have been some high-profile cases; Australian schoolteacher Melanie Kilgour was involved in a romance scam in 2020 that cost her an estimated $50,000 worth of bitcoin.

Protecting Against Romance Scams

Crypto News Australia has put together an excellent guide on how to avoid Bitcoin scams, including a section on romance scams, which we strongly recommend you check out. Additionally, at the end of his postmortem, Lopp provides a list of useful strategies to help protect yourself and minimise the risk of becoming a victim of a romance scam.

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Crypto News Scams

Another South African Ponzi Scheme Exposed for 8,000 Bitcoin

The award for the World’s Biggest Bitcoin Scam of 2020 goes to Mirror Trading International (as declared by Chainalysis). MTI has been ordered into liquidation by South Africa’s Western Cape High Court after being shut down for operating a financial service without a licence and for misleading investors.

An amount of 8,000 Bitcoin (currently worth around US$268 million) has been traced and found in addition to the 1,281 bitcoin already recovered from broker FX Choice. Liquidators believe they will be able to track down more of the bitcoin in question, estimated to be around 29,000 in total.

Liquidators Aiming to Recover as Much BTC as Possible

We obviously want to recover as much money as possible for members, particularly the elderly and the vulnerable. It’s important for members to know that they will not be required to pay into the estate just because they benefited from withdrawals. It merely means their claims will be reduced by the amount that they have already received in terms of withdrawals. If they paid in for example, R30,000, and withdrew R10,000, this means their claim against MTI would be reduced from R30,000 to R20,000.

Riaan van Rooyen, joint liquidator

MTI’s Commissions-Based Franchise Fraud

Mirror Trading International operated as a typical multi-level marketing system pyramid scheme where members were rewarded with commissions of 10 percent on money invested by new referrals, from their “down line”. MTI had an estimated 280,000 accounts by the time it was shut down in December, but liquidators suspect that the real number could be half once bogus accounts in the name of pet goldfish and the family dog are ruled out.

Liquidators will return to court in September to argue MTI should be declared a Ponzi scheme.

In related news from South Africa, Ameer and Raees Cajee – the brothers behind Cape Town-based crypto investment platform Africrypt – disappeared last month under suspicious circumstances along with 69,000 bitcoin belonging to their clients.

Categories
Australia Crypto News Scams

Latest Australian Crypto Scams Going Around in 2021

Investment scams involving bitcoin and other crypto assets are on the rise, leading to huge losses for many Australians and warnings from consumer protection agencies to be wary.

Record losses were recorded in June 2021 – mostly due to investment scams – according to Scamwatch, which is run by the Australian Competition and Consumer Commission (ACCC):

As well as using people’s interest in crypto as a lure, scammers are increasingly requesting that victims pay via bitcoin and other cryptos.

The Australian Securities and Investments Commission (ASIC) has seen an increase in reports from people losing money in crypto ‘investment opportunities’ that are usually outright scams. ASIC warns Aussies should be on alert because:

Offenders are difficult to catch and money lost on bitcoin scams can be difficult to recover, especially when offenders operate outside of Australia and all contact has been online.

ASIC

Types of Crypto Scams to Watch Out For

Investment scams:  

Scammers prey on people’s desire to make money fast with low risk, and often pressure investors to make decisions quickly without looking into the potential downsides or seeking independent advice. Investors are encouraged to sign up and deposit funds into accounts for crypto trading, either via a wallet or bank account – but the exchanges are fake. Scammers display fake data and no actual trading is taking place. Victims are encouraged to deposit more funds and when they ask to withdraw their money, the scammers either cease all contact or demand payment before funds can be released. 

Warning signs include:

  • Persistent calls or emails from strangers offering investment advice or hot tips
  • Ads for sites or seminars that promise ‘risk-free’ investments or how to ‘get rich quick’.

Romance scams:

Taking advantage of people looking for love is a growing area of scam activity. Scammers use dating apps and social media to connect and then manipulate victims into investing in fake crypto trading opportunities. 

Personal identity mining: 

Scammers attempt to obtain personal information (via romance and social media scams, phishing, hacking, malware and remote access scams) so they can steal your identity and access your online accounts. For crypto traders, this could enable access to trading wallets.

Illegal crypto mining:

The Australian Cyber Security Centre warns that cybercriminals are also attempting to hack into people’s computers via malware to illegally use their processing power for crypto mining. 

Read Our Guide on How to Avoid Bitcoin Scams

Learn more about common types of bitcoin scams and how to avoid being tricked into parting with your crypto.

Categories
Scams

Esports Influencers With 5 Million Followers Exposed in “Save the Kids” Crypto Scam

FaZe Clan is in a hot mess after an alleged pump and dump scheme was exposed. The eSports group was accused of running one of the worst influencer scams to date, with its Save the Kids charity token $KIDS crashing on launch.

As a result Faze Kay has been dropped from FaZe Clan while other members involved – Jarvis, Nikan and Teeqo – have all been suspended. In an effort to save face, FaZe Clan tweeted:

Save the Kids, a token that vaguely promised a percentage of proceeds raised would go to charity, was pushed by some of the biggest names in the influencer world. FaZe Kay, FaZe Jarvis, FaZe Nikan, FaZe Teeqo, RiceGum and Sommer Ray have over 50 million followers between them.

With just a little digging around, cross-referencing dates, times, tweets, token sales and a close look at a contract’s tokenomics, there were adequate grounds for suspecting that a potential rug pull was on the cards.

FaZe Kay or FaZe Rug?

Within 24 hours of the Save the Kids launch, FaZe Kay sold all but a few of his 6.2 million $KIDS tokens. The proof is there on the blockchain, in black and white.

Watch the whole Coffeezilla Video below.

Save the Kids was a crypto promoted by influencers Faze Kay, Faze Jarvis, Faze Teeqo, Faze Nikan and Ricegum

Do as I Say, Don’t Do as I Do

FaZe Kay has been the ambassador for many other altcoins that have suffered a similar fate (Gamesafe, SafeGalaxy and Moonportal, for example). After marketing the token or coin, he dumps his holdings immediately after launch, retaining a tidy profit.

YouTuber Coffeezilla asked ‘SomeOrdinaryGamers’ to estimate what kind of profit one could expect to make from a Save the Kids kind of pump-and-dump scheme. By multiplying the number of tokens sold by the price at the time of sale, he calculated that a dodgy influencer could pull an easy US$30,000. For other similar scams, the takeaway could be up to US$60,000 per promo.

It appears that the project boasting “anti-whale” protection actually had classic rug-pull code written into its tokenomics. The contract was rewritten in the final moments before launch, allowing sellers to dump $KIDS tokens after only one minute (from being 24 hours after purchase). Save the Kids developer Lucas said, “That’s what I was told to do” when confronted with the fact that this project had all the hallmarks of a malicious pump and dump. Lucas said he believed the influencers were “in this from the beginning“ and wanted the code changed “probably because they wanted to dump right away“.

FaZe Kay has denied making any money from Save the Kids and maintains that the project was 100 percent in the spirit of charitable giving.

This particular instance isn’t the first of its kind. Earlier this year, an Instagram influencer scammed followers out of US$2.5 million in a dodgy Bitcoin scheme.

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Australia Bitcoin Crime Scams

Australian Bitcoin Romance Scam Victim Melanie Kilgour Sentenced to Six Months in Jail plus Community Service

Australian schoolteacher Melanie Kilgour, who became the victim of an online Bitcoin romance scam after misappropriating funds from her former employer in 2019, has been sentenced to six months’ imprisonment after pleading guilty to fraud charges.

She is also subject to a two-year community corrections order, which includes 150 hours of unpaid community service, and was ordered to repay A$148,908.85 in restitution to her former employer, the Alexandra Community Hub in north-eastern Victoria.

Ms Kilgour pleaded guilty in March this year to charges of defrauding the ACH via multiple transactions. It was alleged that $50,000 was lent to a friend who failed to pay her back, and that an undisclosed sum was spent on repairs to Ms Kilgour’s house.

The court was told that the remainder of the funds had been sent in Bitcoin to an “overseas lover” in an apparent romance scam. The scammer cashed out the amount and later disappeared.

The fraud was detected when it was found Ms Kilgour had forged the signature of ACH director John Cannon.

Kilgour Gives Her Side of the Story

“I am gutted and extraordinarily remorseful for my actions in 2019,” Ms Kilgour wrote in a letter emailed to Crypto News Australia ahead of her sentencing on 1 July in the Victorian County Court. “I seem to have successfully smashed 30 years of achievements in a [relatively] short period of time. This has affected my mental health and put added pressure on my beloved parents, siblings, friends and colleagues, so I find it hard to forgive myself and [I] can never forget.”

Ms Kilgour was dealing with both her parents’ cancer illnesses, an abusive ex-husband, and an unscrupulous builder who was renovating her house when she found herself in a “lonely and vulnerable” position.

I have worked very hard all my life. I understand that one in four women fall victim to romance scams by people who prey on the lonely. Along with losing all of my own savings, I then took money from my employer, to my shame and horror, with no real understanding of the total amounts. My mental health at the time made me feel suicidal.

Melanie Kilgour

Forced To Step Down From New Job

Ms Kilgour found new employment in 2020 at Greater Shepparton Secondary College, also in rural Victoria, but fallout from her court appearance and subsequent negative publicity forced her to step down from the position.

I had never committed a crime before this time or re-offended since, and never will because I have to keep going to support my children and do what’s best for my family. I have suffered greatly and sacrificed a lot to do the right thing since I took the money. I just want the opportunity to be able to keep working hard to pay back my debt to society … with hope of a better future.

Melanie Kilgour

Australians lost over $850 million to scams in 2020, according to a report last month from the Australian Competition and Consumer Commission (ACCC). The Securities and Investment Commission (ASIC) also reported that in just three months last year (March-May), the rate of online romance scams involving cryptocurrency increased by 20 percent.

Please spend some time to learn about the Bitcoin scams going around and how to avoid becoming a victim.

Categories
Crime Crypto News Illegal Scams

Stolen COVID-19 Vaccines and Fraudulent Certificates Sold on Darknet Markets for Crypto

An investigation undertaken by the Coinfirm blockchain analytics team has uncovered illicit trade in Covid-19 vaccines, certificates, and tests on darknet marketplaces.

According to a July 1 report, Coinfirm has identified addresses linked to various vendors selling illicit Covid-19 essentials for crypto assets including Bitcoin (BTC), Ethereum (ETH), Dash (DASH), Litecoin (LTC), Tron (TRX), Monero (XMR), and Zcash (ZEC).

Privacy coins are commonly used as assets on Darknet Markets (DNM) to pay for illicit goods. This is due to properties that allow users to transact anonymously, as well as darknet platforms that cater for people who wish to stay anonymous.

The ‘Vaccine Shop’ wallet was found to be linked to 145 other payment-accepting addresses that have been flagged for stolen/cloned credit card vendors, drug traders, and perpetrators of scams – specifically Bitcoin “doublers” (fully automated investment platforms operating with no human intervention).

Vaccines Including AstraZeneca For Open Sale

One darknet vendor known as ‘COVID-19 Vaccine Shop’ was openly selling an assortment of vaccines in bulk ranging from AstraZeneca to SputnikV.

Screenshot of the ‘COVID-19 vaccine’ shop. Source: Coinfirm

Another vendor, the similarly named ‘Vaccine Shop’, openly states it is selling stolen vaccines.

Screenshot of ‘Vaccine Shop’. Source: Coinfirm

A vendor on one of the largest darknet marketplaces, Hydra, claims to deliver “certification of the completion of a full course of vaccinations from Covid-19, the dates of the vaccine and the series, the doctor’s signature and the seal of the medical organisation”.

Notwithstanding “the obvious dangers of having rogue agents within the medical profession”, one of the most worrying aspects is that some of these services are linked to people who can input and alter information within national health systems.

A US-based vendor, catering to US residents, claims to be able to input client details into the system.

Coinfirm report

Rigorous KYC Measures Remain Vital

The importance of stringent Know Your Customer (KYC) standards have long been a topic of debate. Exchanges and other entities that handle and swap crypto and don’t have KYC built into them can play host to criminals and malicious interest groups seeking an easy way to cash out their funds.

It is for these reasons that every obliged entity should institute rigorous KYC policies.

Coinfirm report
Categories
Coinbase Crypto News Scams

Scam Warning – Coinbase Users Are Being Sent Fake SMS Confirmations

Scammers are sending out fake emails and confirmation messages to Coinbase users in an attempt to lure them into revealing their account details. The exchange users are advised to be wary of such phishing attacks. 

When a New Login is Not What It Seems

Coinbase users raised an alarm about the SMS phishing attack on Reddit. In one of the messages, the recipient was informed that there was a new login to their account and the message included a malicious link for the user to disable the login. 

Out of panic, unsuspecting users, especially newbies, would easily fall for this trick, given that the malicious domain looks almost the same as Coinbase’s official domain. However, on closer inspection, one could spot the difference as the letter “a” had an odd dot below. 

Also note that the fake SMS can come with different messages, as another Redditor shared:

Today’s text was: ‘Here is your Coinbase withdrawal confirmation cxe867zd92d0p. If you did not authorise this transaction, click here to verify your account’.

How to Spot Fake Coinbase SMS and Emails

To begin with, Coinbase has already warned that it doesn’t send out texts to verify transactions: “If you receive a text message reporting that you’ve received digital currency that you did not authorise, it is likely a phishing attempt,” Coinbase cautioned. 

Emails or SMSs that claim to be from Coinbase without its official domain are probably fake. Often, the links in the message will point to another web address when you hover over them.

Fraudsters can also claim to be from wallet providers, as seen in the case of Ledger last week. 

Categories
DeFi Scams

WhaleFarm Token Crashes 99% in Another DeFi Rug Pull

Another project with high-yield promises and an anonymous team has pulled the rug on its investors, stealing over US$2.3 million.

On 29 June, the WhaleFarm token plunged by almost 100% after its developers drained liquidity pools choked with several coins including BNB, USDT, BTC, ETH, ADA, LINK and DOT (Polkadot). 

Mr. Whale Waves Red Flags

The project presented numerous red flags, as tweeted by crypto analyst Mr. Whale, such as high returns of up to 7,217,848% APY (Annual Percentage Yield). A DeFi project with exaggerated high APYs is too good to be true, and usually turns out to be a scam. Plus, an important pattern to detect shady projects is if the team behind it is anonymous – or if it’s backed by a certain organisation that doesn’t show who the developers are. 

Despite its exaggerated high return percentage, the project saw some growth over time, trading above US$200 on most crypto exchanges. The protocol launched a yield farming program for its users looking to lock up their funds lured by the high returns. 

But in just a matter of minutes, the team redeemed their token at once, causing a sharp price drop – leaving investors with almost no possibility of pulling their funds. The team quickly proceeded to delete its official telegram and twitter account, which is how a typical rug pull ends up.

Yet Another Rug Pull in the DeFi World

Rug pulls are exit scams that are becoming common in the DeFi space. Project developers run away with users’ funds by draining the liquidity pools once they reach a high amount, usually millions.

Developers usually swap stolen tokens for Monaro (XMR) to later swap those tokens again for another currency (usually Ethereum or USDT). Monaro transactions are hard to trace because they use ring signatures – a type of digital signature that can be performed by any member of a set of users that have a key.

This rug pull adds to the list of many that have occurred in the DeFi space, including TurtleDex, a Binance Smart Chain-based DeFi storage that drained US$2.5 million in Binance Coin (BNB) after its launch.

As reported by Crypto News Australia, a project that raised suspicions recently is ICP Coin – which dumped nearly 95 percent amid claims the development team might have deliberately caused it to drop from an ATH of almost US$750 in May, now trading at US$46.

Categories
Crime Crypto News Hackers Investing Scams

Founders of South African Crypto Investment Company Vanish with $3.6 Billion Worth of Bitcoin

Ameer and Raees Cajee, the brothers behind Cape Town-based crypto investment platform Africrypt, have disappeared under suspicious circumstances, together with 69,000 Bitcoins belonging to their clients.

Africrypt Investor Presentation 2020: Moneyweb

The Promise of Exceptional Returns and Where Things Started Going Wrong

The company was founded in 2013 and over the years had managed to secure a lot of support from investors, including some prominent local celebrities. Ostensibly, it was a well-run business that continued to grow on the back of “sophisticated algorithmic trading” that promised returns of 10% per day.

Things took a strange turn in April when investors were sent an email alleging a hack. The email noted that the platform would be shut down and investors’ accounts, wallets and nodes frozen. Most surprisingly, investors were requested not to contact law enforcement authorities as this would “slow the recovery process”.

Investors Appoint Investigators as Suspicion Grows

Shortly thereafter investors hired specialist legal practice Hanekom Attorneys who established that the company had moved 69,000 Bitcoins from their clients’ wallets through a crypto tumbler, making them virtually untraceable. Investigators also found that Africrypt employees had lost access to the back-end platforms seven days before the alleged hack.

We were immediately suspicious as the announcement implored investors not to take legal action.

Derek Hanekom, Hanekom Attorneys

Hanekom indicated it was unlikely that all funds came from South Africans, saying it looked more like an international money laundering operation. The South African Police has been assigned to the case and has contacted exchanges to ensure the funds aren’t liquidated. It is alleged that the Cajee brothers have since decamped to the UK, but that remains unclear.

Investors Cautioned: Do Your Own Research

The crypto space remains a very new market that is highly volatile and experimental, and investors are advised to always DYOR (do your own research).

Some recent scams we have seen:

Despite the discernible scams occurring, crypto remains an exciting prospect for the African continent with projects like Cardano developing blockchain solutions for decentralised identity and financial systems.